Executive Summaries » The Era of the Whistleblower has Arrived

The Era of the Whistleblower has Arrived

March 15, 2013

In recent years there has been a major expansion in the scope of whistleblower incentives and protections. A former banker at UBS recently received $104 million for reporting alleged tax evasion by UBS. This is believed to be the largest ever tax-related whistleblower award to an individual. The award was made pursuant to 2006 amendments to the I.R.S. whistleblower program, as part of the Tax Relief and Health Care Act of 2006.

The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act brought a major expansion of the class of potential whistleblowers, and in August of 2012 the SEC issued its first award under the whistleblower bounty program created pursuant to Dodd-Frank.

The whistleblower provisions came on the heels of False Claims Act revisions that also broaden the reach of whistleblowers, first in 2009 through the Fraud Enforcement and Recovery Act (FERA), and then again in 2010 as part of the Affordable Care Act.

Companies should have appropriate internal controls in place, and they should utilize audits to identify potential issues. Mechanisms for internal reporting of potential misconduct should be established, with enough resources made available to adequately investigate and act on them.

Given the broad anti-retaliation provisions in many of the whistleblower laws, companies should also ensure that there is sufficient documented non-retaliatory justification to support any adverse employment action taken against an employee. They should use exit interviews to identify issues, and ask employees to confirm the absence of issues.

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